Brittany Patterson Published

Judge Approves Contura Proposal to Bid for 3 Blackjewel Mines

Blackjewel coal mine


A federal bankruptcy judge has approved a plan by West Virginia-based Blackjewel LLC to begin the sale of its coal mines and other assets. 

At the heart of the proposal, Tennessee-based Contura Energy Inc. will be the “Stalking Horse Purchaser,” or initial bidder, for three of Blackjewel’s surface mines. 

Blackjewel is the country’s sixth-largest coal company, according to 2017 federal data. It declared Chapter 11 bankruptcy on July 1. The majority of its 1,700 employees are out of work, many awaiting back wages, as the chaotic bankruptcy has unfolded. 

Southern District of West Virginia Bankruptcy Judge Frank Volk approved the order Friday. Contura will purchase Blackjewel’s two Wyoming mines — Belle Ayr and Eagle Butte —  and the Pax Mine in Fayette County, West Virginia. 

“It makes good sense to approve the debtors motion,” Volk told the court. “This appears at the present time to be the only path forward to get some of the [sic] value out of these assets and also to pull back what may very well be the majority of the employees that had employment in the industry.”

Contura is offering $20.6 million for the properties. The company previously ran all three sites. About $8.1 million will immediately be transferred to Blackjewel to fund operating expenses and professional fees through Sunday, August 4. 

The approval of the motion also kicks off a speedy sale process. Pending court approval of bids, due by July 31, the company intends to have all sales closed by August 5. 

Blackjewel’s mines and processing and prep facilities in Virginia, Kentucky and West Virginia will also be up for sale. Stephen Lerner, a lawyer with Squire Patton & Boggs representing Blackjewel, said the company has entered into non-disclosure agreements with multiple interested buyers and some have visited sites in Appalachia. 

Lerner said it’s likely not all of Blackjewel’s assets will be sold during the process, but it intends to settle all unpaid employee obligations after sales are finalized, and before liquidation begins.  

The deal, which was hammered out over two hearings Thursday and Friday, was met with substantial objections from many of Blackjewel’s creditors, including the United States government. The company owes $60 million in royalties to the U.S. Department of the Interior for the Wyoming mines in addition to other federal debts. 

Fred Westfall, a lawyer representing the government, told the court the time table laid out in the deal was too short to allow interested buyers to examine the company’s mines and assets, and feared the government would lose its ability to collect its debt. 

“This encourages situations in the future of encouraging coal mines from not paying royalties,” he said. 

He also said Contura currently does not qualify to take over the Wyoming leases, according to Interior’s Bureau of Land Management. Contura will assume none of Blackjewel’s liabilities, except for the nearly $250 million in reclamation obligations associated with Powder River Basin mines.

Sam Petsonk, a lawyer representing Appalachian Blackjewel employees, almost all of whom have not received back wages, told the court the deal should include money for paychecks and benefits owed to employees. 

“We’re not asking for the sum to change, but we should be at parity,” he said. 

Hundreds of Appalachian employees are owed nearly $11.8 million in payroll and taxes, as well as $1.2 million in employee retirement contributions. 

The deal also dissolves Blackjewel’s 401K plan.